Bloomberg Backs Goldman Sachs Over Ex-Employee Op-Ed

Michael Bloomberg apparently thinks an attack on Goldman Sachs is an attack on New York City.

On Wednesday, a former employee of the investment bank, Greg Smith, savaged the company in a New York Times op-ed, which has since been widely discussed. Smith called his former colleagues out for “callously” talking about ripping clients off and labeling them “muppets” or worse.

Mayor Bloomberg took that somewhat personally. He visited Goldman Sachs yesterday and later publicly voiced his support for the company. According to the New York Daily News, Bloomberg said on on WOR Radio’s John Gambling Show that the news media piling on to Goldman is “ridiculous.” He also dismissed the “muppets” allegations.

“Even if it was said, it’s a few people and, you know, Goldman Sachs is a firm that’s been around for well over a hundred years and it’s a great firm,” Bloomberg said on air, according to the Daily News.

The Mayor also said it’s his job to “stand up and support companies that are here in the city that bring us a tax base that employ our people and I’m going to do that.”

Of course, Bloomberg, who has $22 billion of personal net worth, made his fortune catering to banks and other investment companies. The Boston-born Harvard MBA started his career in the 1970s at another investment bank, Salomon Brothers.

After leaving that company, Bloomberg created Innovative Market Systems, a firm selling data and analytic tools to Wall Street. He renamed it Bloomberg LP in 1987, and has since added a news service, multiple magazines, a cable network and radio station.

Bloomberg didn’t comment, apparently, on the allegations Smith made regarding Goldman Sachs’ business model that many argue is rife with conflicts of interest. The ex-employee wrote that the company persuades clients to “invest in the stocks or other products that we are trying to get rid of” and to “trade whatever will bring the biggest profit to Goldman.”

If you don’t think that makes Goldman Sachs sound like a model New York City business, you’re not alone.

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Greg Smith was not an “Executive” at Goldman Sachs, high-level, low-level, or any level. Greg Smith was a minor-salesman and fifth-yr V.P. selling US product in Europe. And if you know investment banking then you know the following:

1. A fifth year V.P. is someone that has been passed over for Managing Director three times

2. “V.P.” is a title w/ little meaning on Wall Street, other than “junior banker that survived their first four years (as an Associate) intact”

3. “Three strikes and you’re out” applies, so Mr Smith would have been informed in January 2012 that he would not ever make Managing Director, and that therefore he should consider other career opportunities

4. “Sales” is a low rung on the Equities/Securities totem pole

5. Selling US product in Europe is the lowest rung on the “Sales” totem-pole

6. Greg Smith did not “run” or “head” a business, other than his own activities covering European accounts on US derivatives. Nobody worked for Greg Smith.

The real story of this non-story about a disgruntled junior banker angry about being passed over for promotion and his meager bonus is why the lazy and/or ignorant editors of the NYT editorial page would post such garbage. What’s next on the NYT editorial page, a rant from a fifth grader who’s angry about receiving homework assignemnts on weekends?

There are 11,999 Vice Presidents that go to work at Goldman Sachs every day and into the night – including weekends – who serve their clients and do it well. Will the NYT be willing to post 11,999 editorials entitled “Why I am Staying at Goldman Sachs”? I think not, because it does not fit with the media’s (and politician’s) narrative about the causes of the housing bubble and collapse.

As to the ignorant, populist narrative about “ripping off clients”, were that so, why is Goldman Sachs the perennial and perpetual number one in equity underwriting, M&A, structured products, equity trading flows,…? Is it because Institutional and Corporate clients are “dumb” or “muppets”?

Your probably right on Greg Smith’s eminent departure. Perhaps because he had trouble executing sales in his earlier years that were not to the best interest of the client. That will always stifle your growth in a firm like Goldman Sachs. Looking back at your own progress withn the same compnay do you ever wonder who ulitmately paid for your own success? Also, does this recent from of “Brown Nosing” add to your own future within the mighty empire of GS? I’ll give you that G.S. is not alone at putting their proffits ahead of their own fudiciery obligations to cleints. I’ve been the unfortunate recipient of several institutional ” proprietary fund ” purchases that always seem to underperform in their sector. The scariest fact about Goldman is their CEO’s seem to be the heir apparent to running the Federal Reserve. Let us know how that bonus works out for you..

I read the letter of Smith and it felt like a heartfelt advice. The answer of the Goldman`s employee above? Just confirmed what Smith is saying. The employee is minimizing or trashing a ex-employee`s opinion because of what? his rank? That is not way to qualify a human being. He was going to be let go on January of 2012. Well he wasnt let go. He left. Its bad to bring those IF argunments to make a point. Smith was just a low grade salesman in Europe. Europe is very big. Smith was in London, a financial hub. I doubt Smith is a washed up employee like the employee above is trying to sell us. After reading a lot from Warren Buffet, Charlie Munger and FIASCO I can say that Smith`s comments do not come as a surprise to anyone. I have had friends change overnight as soon as they enter the world of investment banking. Their life becomes altruistic and money is the meaning of ther life. Personally, I do not like to display my wealth. I laugh when I see my banker friends thinking that they are Carlos Slim or Warrent Buffet rich. In addition, if someone wants to use the argument that Warren Buffet invested in GS, well dont. It was more like a short term loan. We all know that short term loan are made to clients that you do not fully trust yet you are willing to give an opportunity. So, to the employee I can only say this: I human being is not measure because of his rankig (According to Smith`s letter he had a very good position and was in charge of important clients) or net worth. The next time you want to make a point use real examples. Dont use examples like : people know what VP means just junior, he is a low ranked employee, he was going to be let go anyway. That sounds like a childish excuse and helping make Smith`s point. Finally, just as a bonus, if Goldman is not about appareances or lies why do you choose to call a fourth year dumbed down sales man a VP? It looks to me that one wants to mislead their clients to believe they are dealing with someone of importance in the company. Second, it also looks like fake appereances are really important in your company. PD: Apologize for my english, it is not my first language.

I am not the least bit surprised that those that work for or support Goldman Sachs because of the tax base they bring to thier city, jump to thier defense. The person who berated the autor of the op-ed depends on swindling the public of thier money. It was proven in a Senate hearing. I watched as it came to light that Goldman Sachs admitted that they purposely sold what they called shitty deals to clients, while they sold short against those same products. Anyone who would trust thier money to these thieves deserve what they get I suppose. Hopefully people will wise up and realize that these bankers aren’t the bankers of our not so long ago past. Thier only care is for themselves and how well they live thier own lives, no matter who they ruin to get there.

Good point Tommy, The true revelation about how our laws aren’t administered equally came when Goldman Sachs was allowed to keep their license after admitting in that senate hearing that they swindled their own investors. Any small investment firm would have been out of business for setting aside their Fiduciary Obligations to their clients as Goldman admitted to. It’s nice to see how Mr. Bloomberg sticks up for them. In other words they might be a crook but they’re our crook.

Mayor Bloomberg’s defense just proves Mr. Smith’s point: He and G-S only care about the company employees. Furthermore, just because a firm has “been around for well over a hundred years” does NOT make it a great firm.